Cephalon to make bid for ChemGenex

Cephalon has announced its intention to make a $231m takeover bid for the Australian biotech company ChemGenex, which has a potential therapy for chronic myeloid leukaemia (CML) in late-stage development.

ChemGenex has said that its board of directors is in unanimous support of the bid and will recommend it to the company's shareholders.

"The ChemGenex board welcomes Cephalon's bid, which represents an attractive premium to the current and recent trading prices of ChemGenex shares,” said company chairman Brett Heading. "In the absence of a superior offer, the board will unanimously recommend that ChemGenex shareholders accept the offer."

Cephalon plans to make the all-cash offer, which represents a 59 per cent premium to ChemGenex's share price, through its wholly owned subsidiary Cephalon CXS Holdings. The US company is offering 70 Australian cents per share plus 2 Australian cents for every Australian Securities Exchange-listed ChemGenex option.

ChemGenex's CML therapy, a small molecule known as Omapro (omacetaxine), is expected to be filed with the US Food and Drug Administration (FDA) as well as in Europe in the second half of this year. The company plans to seek an indication for use in CML patients who have failed two or more currently approved tyrosine kinase inhibitors.

ChemGenex originally filed a US marketing application for the drug in late 2009 for the treatment of CML patients who have failed treatment with imatinib and who have developed the Bcr-Abl T315I mutation. However, in early 2010, the Oncologic Drugs Advisory Committee recommended that the agency deny approval of that application due to a lack of robustness in the data.

ChemGenex plans to commercialise the drug itself in North America, but has a development and commercialisation deal with Hospira covering Europe, the Middle East and parts of Africa, and is looking for partnerships in the rest of the world.

ChemGenex is focused on developing small molecules with new mechanisms of action for the hematology/oncology market.

In December 2010, Cephalon took a 20 per cent stake in another Australian biotech company, Mesoblast, in a deal that also gave the US company rights to develop adult stem cell treatments for degenerative conditions of the cardiovascular and central nervous systems.

In March 2011, the company entered into an agreement to acquire the cancer drug development company Gemin X Pharmaceuticals in a deal that could be worth up to $525m.